+

Earned Value Management Essentials

Earned Value Management is more than people, processes, and tools. It is an integrated service that provides actionable information to the decision makers

+ The Six Business Systems Needed for Project Success

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Accounting

Material Management Estimating

Property Management

Earned Value Management

Procurement

+ The Core Systems Needed for Earned Value Management

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Accounting

Material Management Estimating

Property Management

Earned Value Management

Procurement

+

Z

44 Data Elements of a Baseline Earned Value Management System

1.  Contract scope 2.  Contract Modifications 3.  WBS and CWBS Dictionary 4.  Work Authorization 5.  Summary Level Planning Packages 6.  Control Account Performance Reports 7.  RESERVED 8.  Integrated Master Plan 9.  Organization Charts 10.  Organizational Breakdown Structure 11.  Responsibility Assignment Matrix 12.  Integrated Master Schedule 13.  Intermediate Schedule 14.  Detailed Schedule(s) 15.  Proposal Basis of Estimates 16.  Schedule Update Forms 17.  Resource Plan 18.  EAC Updates 19.  EV Update Form 20.  Subcontractor / Vendor IMS 21.  Material Schedules 22.  Staffing performance Reports

23.  Material Labor 24.  Baseline Change Report 25.  Bill of Materials 26.  OBS / WBS Performance Report 27.  Material Status 28.  Material Data 29.  Subcontractor Data 30.  Estimated Actuals 31.  Indirect Performance Reports 32.  Accounting System Data 33.  Summary Performance Reports 34.  Earned Value Metrics 35.  Variance Reports 36.  External Performance Reports 37.  RESERVED 38.  Corrective Action Plans 39.  Risk Management Reports 40.  Technical Performance Reports 41.  Baseline Change Request 42.  Contract Change Requests 43.  Change Logs 44.  Budget Logs

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+ Activities That Use This Data 5

§  Define  the  work  §  Assign  responsibili3es  

§  Define  indirect  procedures  

§  Establish  proper  management  controls    

§  Schedule  all  work  §  Authorize  all  work  §  Time-­‐phase  the  work  

§  Develop  cost  accounts  

§  Material  costs  §  Unit/lot  costs  §  Cost  summariza3on  

§  Understand  contract  status  

§  Use  data  for  decision-­‐making  Assignments  made  to  

responsible  organiza3ons  

Maintenance  of  budget,  work,  and  schedule  

rela3onships  

Do  not  modify  past  budget  or  actuals  (w/o  permission)  

All  documents  properly  maintained  

Planning  Scheduling  and  

Budge3ng  

Organiza3on  

Analysis  and  Management  

Reports  

Accoun3ng  Considera3ons  

Revisions  

+ 11 of the 32 EIA-748-C Guidelines Critical to Program Success

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1. Define a Work Breakdown Structure

2. Identify the Organizations

doing the work

5. Integrate WBS and OBS into a RAM

6. Schedule all Planned Work

7. Identify Products and Milestones

8. Time Phase the Budget

16. Record all Direct Costs

23. Determine all Variances

25. Sum These Variances

26. Manage Action Plans

28. Incorporate Changes

+ Performance Indicators Derived from EVMS Data and Processes

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+ These Indicators …

… must reveal root causes of performance shortfall.

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Unrealistic Performance Expectations missing Measures of Effectiveness and Performance

Unrealistic Cost and Schedule estimates based on inadequate risk adjusted growth models

Inadequate assessment of risk and unmitigated exposure to these risks without proper handling plans

Unanticipated Technical issues without alternative plans and solutions to maintain effectiveness

Cost and Schedule Impacts

The

Lens

of t

he

Perf

orm

ance

Indi

cato

rs

“Borrowed” from Gary Bliss, Director, Performance Assessments and Root Cause Analyses (PARCA), Office of Assistant Secretary of Defense for Acquisition.

+ 10 Critical Success Factors for Deploying an EVMS

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1.  If a project has a scope, schedule and budget, EVM can be an effective project management tool.

2. EVM's principles are reliable predictors of project success.

3. Expert planning is required to use EVM effectively.

–  This expertise can be learned through coaching, mentoring, and external advice

4. EVM works best in collaborative organizations where teamwork and frequent communications are present.

5.  EVM complements other project management techniques.

6.  VM metrics are reliable, consistent, and trustworthy.

7.  Contract type doesn't influence EVM's benefit.

8.  Retrofitting EVM after a project is under way is a bad idea. –  This is exactly what happens, so

we’ll just have to deal with it

9.  EVM's mechanics can be emphasized individually for maximum benefit.

10.  Active, top-down support is required to increase EVM acceptance.

+ The Integrated Program Management System …

n  Budget processes – assign, authorize, and record

n  Fully Integrated cost and schedule – all work has budget

n  Status reporting – expenditures of time and budget with resulting technical progress

n  Change management – to maintain the integrity of the baseline

n  Earned Value performance techniques – that Objectively assesses accomplishments at the work performance level.

… must address each principal of success with data, processes and actionable information

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+Connecting the Dots Between Cost, Schedule and Objective Assessment of Technical Performance The role of the Earned Value Management System (EVMS) is to connect the dots between budget (BCWS), performance (BCWP) – informed by technical performance, schedule, risk reduction activities, and estimates to complete

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+ Sources of Objective Technical Measures of Technical Performance

Risk

SOW

Cost

WBS

IMP/IMS

TPM

PMB

GA

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+ The Dots and Their Connections Each data element and its connection increases the visibility

to the program’s performance assessment

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WBS   TPMs  

EVM  ETC  EAC  

Irreducible  uncertainty  

in  reference  classes  

Reducible  uncertainty  held  in  Risk  Register  

Schedule  Margin  in    DI-­‐MGMT-­‐81861  

Cost  Con3ngency  †  

Risk  re3rement  in  PMB  

Management  Reserve  covers  unmi3gated  risk  

MOE  

MOP  

Physical  %  Complete  

PE  

SA  

AC  

JROC  KPP  

IMP  

IMS   WP  

 KPPs  

+ Technical Performance Informs Earned Value

Critical Success of Program Management means connecting the dots of Cost, Schedule, and Technical Performance

Integrate  cost  and  schedule  performance  with  objec7ve  technical  measures  of  performance  

Objec3ve  Technical  Measures  Cost  Performance   Schedule  Performance  

Conven3onal  Earned  Value  

+  =  

Basis  of  Es3mate  developed  from  scope  of  work  and  historical  performance,  and  risk  adjusted  for  all  classes  of  cost,  to  produce  a  resource  loaded  PMB  with  MR  established  in  the  EVMS.  The  ETC  and  EAC  updated  as    the  program  progresses  using    objec3ve  technical  measures  of  performance.  

Cost  

Measures  of  Effec3veness  (MOE),  Measures  of  Performance  (MOP),  Technical  Performance  Measures  (TPM),  Key  Performance  Parameters  (KPP),  and,  other  …ili7es  of  the  technical  aspects  of  the  program  performance  inform  the  Physical  Percent  Complete  used  to  Inform  BCWP.  

Objec3ve  Technical  Measures  

Determinis3c  IMS  derived  from  the  IMP  /  Statement  of  Work  (SOW),  showing  how  all  deliverables  defined  in  the  WBS  will  be  produced  and  reducible  risks  mi3gated  with  Re7rement  Plans,  and  Irreducible  risks  mi3gated  with  schedule    margin  and  Management  Reserve,  to  establish  the  Credible  PMB.  

Schedule  

GA

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+Assembly the moving parts into a successful EVMS People, processes, and tools are the start. For real sustainable success more is needed

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+To be successful in this assembly … 16

We need the ability to install, train, mentor, coach, surveil,

operate, and sustain a program’s Program Planning and Controls functions to provide actionable

information to the decision makers

+Tools

n  Ready for market DOD, DOE, NASA, OMB Circular A-11, Part 7 compliant Earned Value Management System n  All IPMR formats n  Integrated risk management for Schedule Risk Analysis and

Technical Risk Management n  Cost Accounting integration for PMB management

n  EVM in a Box notion n  Ready to use version n  Requires only WBS, Control Account, and Work Package

structures n  Charge Numbers n  Contains data elements associated with EVM

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+Processes

n  Earned Value Management System Description n  EVMS Guidelines tailored to program need n  Work Instructions for baseline processes n  Tailored sections for integrated systems

n  Control Account Manager resources n  Training n  Coaching n  Check list cards n  Forms

n  Program Manager resources n  Reports n  Forecasting tools n  Variance analysis tools

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+People

n  Subject Matter Experts – in EVMS, Program Planning and Controls, Risk Management and Integrated Master Planning and Scheduling.

n  System Integration people and processes – capable of connecting data and process between the six business systems.

n  DCMA / DCAA validation experience and processes – based on DAU 262 and DCMA training and processes.

n  Broad federal government agency and commercial experience in EVMS and Program Performance Management.

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